This Is Guernsey

By Joel de Woolfson

Companies such as DHL could play a bigger part in postal deliveries following the OUR’s decision to remove most of Guernsey Post’s reserved area. (Picture by Tom Tardif, 0893802)

GUERNSEY Post has a year to address its inefficiencies or face a further reduction of its monopoly, Healthspan has warned.

The company responded yesterday to news that the States-owned mail service will face increased competition after the Office of Utility Regulation reduced its ‘reserved area’ of the market.

Guernsey Post will, from April, have a monopoly only over letters and large letters costing less than £1 to post.

The current reserved area gives it a monopoly over all types of mail costing less than £1.35.

Packages and packets will now be open to full competition.

Healthspan backed the OUR’s decision to reduce the reserved area, but warned that bulk mailers would demand a further reduction unless Guernsey Post improved.

‘Healthspan welcomes the news of the OUR decision to introduce pricing in proportion, the opportunity for downstream access for bulk packets and the reduction of the reserved area,’ said operations director Chris Jackson.

‘However, we recognise the majority of Healthspan’s products are sent as large letters and remain in the reserved area.

‘The OUR has effectively given GPL a time window in which to address some of its cost structure issues, as pressure will continue to grow to be competitive and further reduce the reserved area.’

The bulk mail industry body has urged GPL to control its ‘spiralling’ overheads.

Speaking after consulting members, Guernsey Bulk Mailers’ Association chairman Rodney Brouard said that they were generally in favour of the regulator’s decision.

‘Considering that all bulk mailers operating from Guernsey use a maximum of 10% of Guernsey Post resources and provide well over 50% of Guernsey Post revenue, I hope the general public understand the frustration of the bulk mailers,’ he said.

‘Why should bulk mailers be subsidising other areas of Guernsey Post Ltd because Guernsey Post Ltd is being operated inefficiently?

‘A monopoly without doubt does not have the same incentive to contain costs as a business operating in a competitive environment.

‘I sincerely hope that the board of Guernsey Post has the will to contain the company’s spiralling overhead costs at a time when all businesses have and will continue to look at containing theirs.’

Mr Brouard said bulk mailers would ‘reluctantly’ leave Guernsey Post if they were offered a better deal elsewhere.

‘Nobody would leave Guernsey Post if the deal is the same or similar as that offered by other competitors,’ he said.

‘Guernsey at any time, let alone when we are really strapped for cash, must preserve its local industries like bulk mail. Some companies will leave Guernsey and operate from Jersey or other jurisdictions if the OUR report is challenged and stopped.’

n Guernsey Post requested that the OUR’s decision last for one year because of the utility’s current negotiations with Royal Mail. The regulator agreed and will review the market again in 2010, when it will look to set tariffs for the following three years.

Article posted on 24th December, 2009 - 11.30am